1998 (1) TMI 163 - AT - Central Excise

Summary

Issues:
- Availment of notional Modvat credit under Rule 57B.

Analysis:
The judgment involves three appeals raising identical issues, stemming from a common Order-in-Appeal by the Collector of Central Excise. The appellants, manufacturers of various products, including tyres, tubes, and flaps, claimed Modvat credit on inputs used in manufacturing their final products. They received raw materials from Small Scale Industry (SSI) units and took credit based on the duty payable. However, they reversed the differential amount between the notional higher credit and the credit available under Notification No. 175/86, filing refund claims for the reversed amounts. The Asstt. Collector rejected the refund claim, citing non-compliance with Notification 136/88 (para 2).

The appellant's counsel argued that Rule 57B allows a notional higher credit on inputs from SSI units at the applicable duty rate, emphasizing the non-obstante clause in Rule 57B, indicating its overriding effect over Rule 57A. The counsel contended that the lower authorities erred in rejecting the claim based on the limit set by Notification 175/86, citing a Tribunal decision in a similar case (para 3).

The Respondent, defending the impugned order, argued that Notification 175/86 limited the exemption to 5% ad valorem or the applicable duty rate, whichever was lower. Thus, the appellants were not entitled to avail the notional higher credit as claimed (para 4).

The Tribunal considered both arguments and distinguished the present case from the precedent cited by the appellants. While the previous case involved a different notification issued under Rule 57A, the current dispute concerned paragraph 5 of Notification 175/86, issued under Rule 8(1) of the Central Excise Rules. The Tribunal clarified that the non-obstante clause in Rule 57B did not extend to notifications under Rule 8, upholding the impugned order and rejecting the appeal (para 5).

In conclusion, the Tribunal upheld the Order-in-Appeal, finding no merit in the appellant's claim for notional higher credit under Rule 57B beyond the limits set by Notification 175/86. The appeal was dismissed accordingly (para 6).